Turning again to the cyclical behavior of real wages:
I. The assumption made by Marx that wages equal the value of labor power
is *only* valid over the long-term abstracting from changes in the real
wage over the course of the trade cycle.
This means that *in actual fact* wages will hardly ever equal the VLP!
Or, expressing it somewhat differently, wages will only equal the VLP by
way of exception -- the rest of the time wages will either be greater or
lesser than the VLP.
II. Marx, I believe, was fully aware that wages = VLP only holds as
a *trend* and that real wages will fluctuate alongside cyclical changes
in average commodity prices. He claims in at least one place (Volume 3,
Ch. 30 ('Money Capital and Real Capital: I') "Such a collapse in
prices, incidentally [!, JL], only balances their earlier inflation"
(Penguin ed., p. 622). Why this is "incidental" is not explained in that
section.
Marx then adds "The incomes of the unproductive classes, *and
of those who live on fixed incomes*, remain for the most part stationary
during the price inflation that goes hand in hand with overproduction and
over-speculation. Their consumption power thus undergoes a
relative decline, and with this their ability to replace the portion of the
total reproduction that would normally go into their consumption. Even
if their demand remains nominally the same, *it still declines in real
terms*." (Ibid, emphasis added, JL). The same consequence, of course,
could be inferred for wage-workers who receive wages which remain
fixed during the inflationary period.
III. What can we expect to happen to real wages during an inflationary
period? To begin with, *even if* nominal wages and productivity
increase when there is inflation, there is no reason to think that nominal
wages will increase by a rate amount equal to the rate of inflation.
Indeed, there is reason to think that *even if* there is a wage
adjustment that the growth of nominal wages will lag behind the growth
of inflation. This will result in a period in which the real wage has
declined.
Is there any reason to expect that nominal wages during the inflationary
period will _necessarily_ increase such that the real wage will not decline?
To begin with, capitalists can not be expected to _voluntarily_ increase
nominal wages during the inflationary period. Even with increasing
productivity there is no reason to think that capitalists will voluntarily
increase nominal wages. If workers fight for higher wages during the
inflationary period, then -- for the reasons indicated above -- even if they
are successful there will tend to be a time lag before real wages adjust.
It can not be legitimately assumed, though, that workers will be successful
in fighting for higher nominal wages and against declining real wages.
Whether they are successful depends not only on the demand for
labour-power (and the size of the industrial reserve army), but also on
their level of organization. Certainly, neither we nor Marx would
_assume_ that_ in practice_ the existing level of organization and
militancy of workers is such that workers will succeed to ensuring that
real wages are not eroded. Nor can we (nor did Marx) anticipate
that the *state* will take action to ensure that real wages don't decline
during this period.
IV. To more fully explain the relation of real wages and inflation, we
need:
a) a *dynamic* theory in which aggregate demand, the composition of
capital, the rate and mass of surplus value and profit, the value of
money, productivity, the demand for labour-power, the rate of
change in prices of means of consumption and means of production,
the size of the industrial reserve army, etc. are all subject to change.
From a practical standpoint, there are too many 'unknowns' to formalize
such a theory in mathematical terms. Due to the levels of complexity,
it is doubtful that even a non-linear or game-theoretic model could be
used to formalize such an analysis. The relation of these variables,
however, could be more fully specified and explained through the process
of abstraction.
b) *conjunctural analyses* that takes into account the specific
historical circumstances in different socio-economic formations
that have experienced inflation. Within such an analysis, all relevant
factors including the level of organization of workers would have to
be taken into account. No easy task.
In solidarity, Jerry